Suppose that Linda's parents offer her a choice of presents for her graduation: $500 today to buy herself a bike, or $500 two years from now. If Linda has a positive rate of time preference, which would she prefer, and why?
a. $500 today is preferred to $500 two years from now because Linda values present consumption more than future consumption.
b. $500 two years from now is preferred to $500 today because Linda knows her parents will give her more than $500 after two years.
c. $500 two years from now is preferred to $500 today because Linda values future consumption more than present consumption.
d. $500 today is preferred to $500 two years from now because Linda plans to invest the money and earn higher returns after two years.
a
You might also like to view...
What is the difference between labor's marginal product and marginal revenue product?
A) The marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue. B) Labor's marginal product is a measure of labor's productivity while labor's marginal revenue product is a measure of labor's ability to sell the firm's products. C) The marginal revenue product of labor is the dollar value of hiring an additional worker while the marginal product of labor is the increase in the firm's physical output as a result of hiring an additional worker. D) The marginal product of labor is the increase in output as a result of hiring an additional worker while the marginal revenue product of labor is the increase in profit as a result of hiring an additional worker.
An economic variable that moves in the opposite direction as aggregate economic activity in the business cycle is called:
(a) Acyclical; (b) Procyclical; (c) Countercyclical; (d) A leading variable.
Current research suggests that countries that adopt a pegged exchange rate may be more vulnerable to an exchange rate crisis
Indicate whether the statement is true or false
Cost minimization is the process of making optimal use of all of the inputs whose quantities are
a. set in the short run. b. set in the intermediate run. c. set in the long run. d. variable in the short and long run.